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 |  Subject: Singapore, a Rising Home for Quiet Money, Comes Under Pressure  Fri May 12, 2017 11:21 pm | |
| SINGAPORE — Last year, American law enforcement officials pressed the Swiss bank UBS about Henry Hsiaw, a Taiwan-born American whom they accused of failing to file tax returns.
The world has changed since the days when Swiss banks stood as the peak of privacy for the rich. Already, UBS had paid $780 million in fines and disclosed details of thousands of Swiss bank accounts held by Americans — including the records of one account controlled by Mr. Hsiaw.
Still, UBS balked at handing over information about Mr. Hsiaw’s account with the bank in Singapore. That information, it said, was protected under the Asian city-state’s bank secrecy laws.
That courthouse dispute illustrates the growing pressures on Singapore, an increasingly popular destination for money that wants to stay under the radar. Tight bank secrecy laws have helped draw $1.1 trillion in foreign funds to the city, according to an estimate from Boston Consulting Group, a consulting firm. Singapore is now growing faster than Switzerland and is set to become the largest cross-border financial center in the world by 2028, the firm forecasts.
But in the face of growing international efforts to crack down on tax cheats, and complaints from abroad about its measures to stop illicit money, Singapore has made moves to show it takes the criticism seriously. It has jailed local and foreign bankers and closed down branches of two Swiss banks related to more than $3 billion that was said to have been siphoned from 1Malaysia Development Berhad, a Malaysian sovereign wealth fund, some of which moved through the city’s banks.
Ravi Menon, chief of the city state’s top financial regulator, has said that 1MDB showed Singapore can do better. “There is no doubt that the recent findings have made a dent in our reputation as a clean and trusted financial center,” Mr. Menon said in a speech in July. The authority, he added, was “disappointed with the lapses” in financial controls.
The Straits Times, a Singaporean newspaper, cautioned the city’s banks over 1MDB in an editorial last year. “Business is part of Singapore’s DNA,” it said, “but not the business of facilitating dubious deals.”
Singapore’s position illustrates the new scrutiny global authorities are giving to quiet money. The Financial Action Task Force, a multicountry advisory group set up to combat money laundering, said last year that Singapore’s financial firms had “a less developed understanding of the risk of illicit flows into and out of Singapore.”
“Singapore is the new Switzerland,” said Andy Xie, an independent economist based in Shanghai. Mr. Xie was fired as chief Asia economist at Morgan Stanley in 2006 after a private email he wrote calling Singapore a money laundering center became public.
“Since the U.S. Department of Justice went after Swiss banks for hiding tax dodgers years ago, Singapore has filled the role,” he said.
The Monetary Authority of Singapore, its top financial regulator, disputed that allegation. “There is no doubt some increased risk of illicit fund flows associated with the rapid growth of private banking flows into Singapore,” a spokeswoman said in a written statement. Nevertheless, she said, Singapore “will not tolerate its financial system being used as a refuge or conduit for illicit fund flows.”
Singapore has positioned itself as a one-stop shop for Asia’s rich. It encouraged private wealth managers to use the city as a regional base in the 1990s just as China’s rise created a new generation of wealthy.
Today, in Singapore’s financial district, big names in the private-money world, like Credit Suisse, Julius Baer and UBS, keep offices in gleaming skyscrapers among the squat facades of century-old colonial British buildings. Billionaires can fly in to the private jet terminal, gamble at private high-stakes tables at the two new casinos, and buy and sell on the world’s first diamond trading exchange.
They can store art, wine, gemstones or gold bullion bars in an ultra-secure, duty-and-tax-free facility called Le Freeport. Modeled on similar installations in Switzerland, the facility has been called “Singapore’s Fort Knox.”
The 1MDB scandal has cast a shadow over Singapore’s success. American officials are trying to recoup more than $1 billion that they say was taken from 1MDB and ultimately spent in the United States by family and friends of Malaysia’s prime minister, Najib Razak. Those funds went to American purchases like luxury homes in Manhattan and Los Angeles, to help finance the Hollywood movie “The Wolf of Wall Street” and to acquire paintings by Picasso and Monet, they said in a civil suit last year.
The officials have focused on Low Taek Jho, also known as Jho Low, a young Malaysian financier who partied with the likes of Paris Hilton. American officials say Mr. Low played a crucial role in laundering hundreds of millions of dollars from 1MDB into the United States. Mr. Low and Mr. Najib have denied wrongdoing.
“1MDB and these other cases are a game changer for Singapore,” said Chris Leahy, a co-founder of Blackpeak, a corporate advisory and investigations firm, who is based in Singapore.
In December, a Singapore court sentenced Yeo Jiawei, a former private banker at the local branch of the Swiss bank BSI, to 30 months in prison for tampering with witnesses and obscuring his ties to Mr. Low. In March, Singaporean regulators barred Tim Leissner, a former Goldman Sachs banker who worked with 1MDB, from dealing in securities here for 10 years.
https://www.nytimes.com/2017/05/12/business/singapore-bank-secrecy-1mdb.html?ribbon-ad-idx=13&rref=business&module=Ribbon&version=origin®ion=Header&action=click&contentCollection=Business%20Day&pgtype=article |
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